Sprinklr Inc (CXM) 2022 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Sprinklr's Third Quarter of Fiscal 2022 Earnings Conference Call. Joining us today are Ragy Thomas, Sprinklr's Founder and CEO; Vivek Kundra, Chief Operating Officer; and Chris Lynch, Chief Financial Officer.

(Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Chris Lynch, for introductory remarks. Please go ahead, Chris.

Thank you. And thanks to everyone for joining us today for Sprinklr's third quarter earnings call for the 3-month period ending on October 31. We issued our earnings release a short time ago, filing the associated 8-K with the SEC. And we've also made that available on the Investor Relations section of our website.

As a reminder, during today's call, we'll be making forward-looking statements about the business and about the financial results of Sprinklr that involve many assumptions, risks and uncertainties, and our actual results might differ materially. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them.

For more details on the risks associated with these forward-looking statements, please refer to the text in the company's press release issued today and to our periodic reports filed with the SEC, including our quarterly report on Form 10-Q for the quarter ended October 31, 2021, that will be filed with the SEC. With that, let me turn the call over to Ragy.

Thanks, Chris, and hello, everyone. It is wonderful to speak with all of you again. First and foremost, I'm really pleased to report a really, really excellent third quarter that exceeded guidance on all metrics. Q3 revenue grew 32% year-over-year to $127.1 million and subscription revenue grew 29% year-over-year to $109.9 million.

This is the fourth quarter that we have accelerated our revenue growth rate back to back, which is a continued validation from the world's largest enterprises that there's a massive need to unify experiences across customer-facing functions and teams, from care to marketing, on all modern channels.

And the need is not just to unify customer experiences across functions and teams, it is to unify customer experiences across markets globally. And in many cases, the need is to even unify experiences across brands or business units for multi-brand and multi-business unit companies.

Our vision and strategy hasn't changed since the company was founded 12 years ago. We're here to do 3 things: one, to lead a new category of enterprise software that we call Unified Customer Experience Management; two, to build the world's most loved, and I repeat, most loved enterprise software company; and three, to create a culture that obsesses about customers and treats one another like family.

The sustained execution and results that you're seeing from us this quarter are simply a reflection of who we are and who we always have been. And with this renewed momentum, we have never been more excited about the opportunity in front of us.

Our customers are telling us that they want to replace point solutions in the front office with a single platform, that they need that platform to be purpose built for modern channels, and that it needs to integrate with other best-of-suite platforms that they already have. In short, they need more platforms that work well with each other and less point solutions that don't. This is the reason our net dollar expansion increased significantly this quarter. And we now have 80 customers with more than 1 million in trailing 12-month subscription revenue.

It's clear that every large enterprise in the world is in the midst of their own digital transformation to being customer-centric. And everyone is trying to find ways to deliver a better, more unified customer experience. Most are still early in that journey, but for our 1 million-plus customers like Honda and many others like them, they're moving much faster than others are.

When you talk to our customers and companies like them, you will see a pattern. It's common for large companies to start with point solutions in modern channels and try and stitch it together. The problem is it never scales. And with point solutions, it's impossible for any company to improve the experiences that customers are having with them.

It was the right thing to do 5, 10 years ago, because there wasn't an alternative. They had to choose between best-of-breed point solutions or a platform with basic capabilities. Now with Sprinklr, they don't. They can make a no compromise decision with the 31 next-generation capabilities that they need across 4 major customer-facing functions, from marketing to customer care, all on 1 platform, where everything and everyone can work together.

Unification on Sprinklr doesn't happen all at once. It happens in phases, land and expand. And with a unified platform as broad as ours, any of our 31 products across our 4 product suites can be the entry point. Some customers start by unifying social, maybe across markets and business units, then they expand to unify all of marketing, where they have visibility across content and campaigns.

And then they unify all of outbound engagement, bringing marketing and sales together. Sometimes customers come at it the other way, starting by unifying research, getting insights in 1 place and followed by customer care. No matter what path they start, the pieces come together on Sprinklr, giving these companies something that they know they need. A single platform that could become the foundation for unifying the entire customer experience across all modern channels.

Enterprises don't start with Unified-CXM. They arrive at it. Here are 2 examples. Let's start with Prada, an incredible company that is reimagining the future of luxury. During my last trip to Europe, I had the privilege of meeting Lorenzo Bertelli, who the company recently announced as their future CEO. It was fascinating to hear him describe his vision to unify each brand across in-person and digital channels in order to serve customers when and where they desire the best experience.

Over the past 18 months, the product group has been progressively unifying advertising and engagement in research and care, all on Sprinklr to execute against their digital first strategy and to support the exponential growth that they are seeing on online channels.

They started with Sprinklr's Modern Advertising and Modern Sales and Engagement suites, pulling together 5 global brands for full visibility into campaign creation, publishing and performance across modern channels. The group now manages 147 accounts with more than 5,000 messages published from Sprinklr this year.

They then added our AI-powered Modern Research Suite, tracking 92 million mentions across 183 broad topics with more than 70 custom dashboards from where they get their insights in real time. And in Q3, they added our Modern Care and Conversational Commerce product, which enables proactive selling in the channels that customers prefer.

Another great example is Honda Japan, who first partnered with Sprinklr in 2016 when its data science team adopted our listening product to listen to brand-relevant conversations across social channels and get actionable insights. But then they added display, turning that data into interactive experiences for their employees.

Today, Honda has -- Honda Japan has over 100 users on Modern Research and they track over 100 car models, measuring marketing effectiveness, benchmarking social content and engagement against competitors and detecting and monitoring for crisis.

Honda then expanded the usage of Sprinklr to include Modern Advertising, Modern Care and our Modern Sales and Engagement Suites. In Q3, they added voice as a channel for customer care and engagement as the company's e-commerce business started gathering momentum. They are Sprinklr's first customer to implement voice in Japan, enabling their agents to seamlessly now engage with consumers however they choose to connect. As Honda's head of new e-commerce business, Yoshiaki-san explained to us, our goal is to connect authentically across channels, and Sprinklr enables us to do that.

Sprinklr is a customer-first company. One way that manifests is in our unmatched pace of innovation, which has always set us apart. This quarter was no different. We launched 600 new features and enhancements in the last 90 days that are going to benefit our customers.

One of the more exciting innovations in this last release was our persona-based app that includes a homepage for each job role in the front office. This puts the insights and workflows that each user needs to do their specific job right at their fingertips. This and other usability innovations like this that we've rolled out in the past several years have consistently made Sprinklr easier and easier to use, even for the largest and the most complex use cases.

We've always said that our key differentiator is our industry-leading AI for unstructured public digital data. I'm proud to announce that we've been awarded 2 AI patents this quarter. The first one is for our Smart Responses, which uses AI to deeply understand the conversation between customers and agents and predict the best response to users' questions by understanding the intent. And the second one is for Product Insights, which gives brands highly granular insights into what their customers like and dislike about their products using super advanced artificial intelligence.

Fueled by the strength of our research and development, Modern Care continues to be one of our fastest-growing products and product suites, as evidenced by number of care deals this quarter with brands like Honda and Lululemon and Nestle and Prada. This quarter, we released a powerful feature called compliance management to help banking, financial services and insurance companies comply with regulatory requirements around the world and especially countries like Australia.

Using our AI compliance management helps these companies automatically identify a complaint and route it to the right agent of resource and auditing it to provide end-to-end accountability across 35-plus (inaudible) channels.

In other product news, I'm sure you recall that we announced our first self-service product last quarter, our Modern Research Lite, to make it easier for our target customers to get started with Sprinklr. We're excited about the response we've seen so far and pleased with the positive impact on demand generation and the new prospects it created in our pipeline.

This quarter, I'm excited to announce the beta release of our next self-service product, Modern Care Lite. Modern Care Lite works with our Modern Research self-service product to provide fairly comprehensive care capabilities in an easy-to-use interface.

Also on the innovation front, we received the 2021 Best of Enterprise Connect Award for the best innovation and customer experience for our conversational commerce product. Our new engagement feature uses AI to guide customers from intent to purchase, helping them with product selection and evaluation along the way.

This quarter, Amazon Web Services also awarded us the Government Competency Partner status, that reflects our expertise in delivering a unified platform to address the specific needs of civilian agencies, national defense and intelligence communities, state and local governments and higher education institutions.

On the culture and talent side, we were named to Ink Magazine's 2021 Best-Led Companies list. It's a testament to our focus in creating value for our customers and investing in our talent and our leadership. We also received Cigna's 2021 Well-Being Award for our commitment to improving the well-being of our employees.

For me personally, the testing about public company in the last 6 months-or-so has been the incredible opportunity that I've had to meet with some of the smartest people in the world, from investors to customers across the entire enterprise software space.

Having done over 60 investor meetings and more than 50 customer meetings this quarter with the CIOs and CTOs and CMOs and the heads of customer care across tech and telco and health care and CPG and luxury retailer, automotive and hospitality, I can tell you 1 thing, the message we're hearing is the same across industry, across these different functions and teams and executives. Point solutions are simply not sustainable. They are siloed, they're expensive, it's noncompliant.

In closing, I'd like to summarize a couple of thoughts. First, we believe that every large company will need what we are building. And as a result, the rise of this category is inevitable. Second, we believe that with our focus on innovation and specifically customer-led innovation, Sprinklr will lead the way.

I'd like to thank our customers, partners and all of you, our investors, for the trust you place in Sprinklr every day. And most of all, thank you to over 3,000 of our own Sprinklrites for everything you do. The best is really yet to come. With that, let me turn it over to Vivek.

Thank you, Ragy, and good afternoon, everyone. In Q3, we had phenomenal execution across every function with revenue increasing 32% year-over-year. This performance is validation not only that our go-to-market strategy is working, but that this company continues to scale up and deliver across multiple products and in every market around the world, from Americas to Europe to APJ.

You've heard us talk about Sprinklr being a story of reaccelerating growth. And over the past year, you've seen exactly that. We've increased our revenue growth rate for 4 quarters in a row. This growth is powered not only by strength in our new bookings, upsells and cross-sells, but also by the fact that we continue to have world-class customer retention across the board.

From our largest and most strategic global customers to our smaller enterprise customers, that retention is a clear indication of the stickiness and immense value these enterprises are realizing from our platform. And it is even more evident when you look at our 1 million-plus customer base.

As of Q3, we now have 80 customers globally, generating $1 million plus or more in subscription revenue. These are the world's largest and most iconic brands like Microsoft, Vodafone and Twitter, and they represent the best of what Unified-CXM looks like. Today, 90% of these $1 million-plus customers have at least 3 of our 4 product suites and to continue to expand with us quarter after quarter.

As you've heard me say before, we have a growth flywheel that's working at scale across our customer base, with a proven ability to upsell, cross-sell and expand across brands and geographies. I want to congratulate the team on driving a significant increase in our net dollar expansion this quarter to 117%.

From our ability to upsell, expanding an account like Pepsi with hundreds of new seats for Modern Sales and Engagement and a significant expansion in Modern Research to our ability to cross-sell, landing an account like Kingston Technology with Modern Sales and Engagement and Modern Research and expanding into Modern Care, to our ability to expand across brands and geos as we've done repeatedly with Samsung and did again this quarter as they added hundreds of new Modern Care licenses expanding into LatAm, Southeast Asia and India.

We continue to see our primary growth factor and focus on large enterprises with $1 billion plus in annual revenue paying off. With expansions like these and others from brands like Nestle, Lululemon and Superdry, the addition of new logos like Hugo Boss and Land O'Lakes and with thousands of companies still left to target as our sales capacity continues to grow, we've never been more confident in this segment's ability to fuel durable sustainable growth for years to come.

But it's not just our first growth vector that gives us confidence. We also have momentum in our second growth vector focus on enterprises with $100 million to $1 billion plus in annual revenue. These are also large organizations grappling with point solution chaos.

And in Q3, we signed up amazing new customers like Ledger, CrossCountry Mortgage and Everlane. We see tremendous opportunity in this vector. That's why, last quarter, we introduced a self-serve way for enterprises to try a free lightweight version of Sprinklr to accelerate and drive greater efficiency in our inbound demand gen efforts.

We're pleased with the early results for Modern Research Lite and had a few thousand brands sign up in just a few months. It's still early, but we're already seeing that activity drive demo requests for our full solution and bring new prospects into the pipeline. And with Modern Care Lite now available in beta, we will continue to innovate and expand our footprint in the second vector.

Another pillar of our growth flywheel is our partner ecosystem. In Q3, these partners helped us land and expand significant customer wins like Land O'Lakes, Jumbo, Alaska Air and Prada in addition to 4 $1 million-plus ARR deals. We continue to expand our international footprint as well, adding fantastic new partners like Capgemini to extend our presence in Europe and Wipro to broaden our reach throughout the Middle East and Asia.

Now I'd like to share 2 customer wins from this quarter, TikTok and MGM Resorts. TikTok is only 3 years old. And with over 1 billion users around the world, it's already one of the fastest-growing entertainment services company in history.

When I met with the company's Global Head of Marketing recently, it was clear TikTok is focused on delivering great experiences at unimaginable scale. In early 2020, TikTok turned to Sprinklr to do just that, starting with its global marketing team before quickly expanding to more than 20 countries spanning multiple business units, teams and external agencies, all of which are now unified on Sprinklr.

In Q3, TikTok added even more users and bought Sprinklr into another new region, Southeast Asia, expanding a partnership that now includes Modern Research, Modern Sales and Engagement and Modern Care. With Modern Research, TikTok leverages advanced AI to make sense of what's being said about one of the world's most talked about brands, distilling relevant conversations into real-time insights about TikTok's brand perception and market trends.

With modern sales and engagement, TikTok isn't just collecting feedback, they're taking action, empowering their teams to interact with users across multiple channels. And with Modern Care, TikTok has been able to provide best-in-class support.

Now let's switch gears to MGM. The hospitality and entertainment industry was hit hard during the global pandemic and MGM Resorts International, a Sprinklr partner for over 8 years, was no exception. A global entertainment company with destination resorts around the world, the story of MGM over the past 18 months is one of triumph over adversity.

For years, MGM has managed its entire customer experience workflow within Sprinklr, including 913 accounts across 14 channels using Modern Research to gather deep insights about its brand and Modern Sales and Engagement to surprise and delight its guests with unforgettable experiences.

When the pandemic hit, Sprinklr became more vital to MGM than ever before, not just because MGM needed critical insights about customer sentiments that were changing by the minute, but also because, with many of its employees furloughed, they needed to be able to do more with less. Sprinklr's AI capabilities have been central to helping the company triage 300,000-plus inbound messages and more than 50,000 guest reviews so far this year, automatically categorizing each one and identifying those that need immediate attention.

In Q3, MGM implemented location insights for more than 300 restaurants, bars and hotels to provide an even more granular set of insights, helping them take targeted location-specific actions to improve the guest experience.

When asked about our partnership, Kristina Arrieta, Executive Director of Social Strategy, said, "These insights allow us to achieve our #1 priority, guest-centricity, while simultaneously mitigating risk to our brand, which has been critical for MGM over the past 1.5 years." Today, 1,100 of the world's largest and most valuable enterprises turn to Sprinklr for 3 reasons.

First, the depth and breadth of our unified CXM platform is unmatched and purpose-built for the enterprise. Second, our industry-leading AI enables enterprises to make sense of unstructured customer experience data and act on it at scale. Third, we deliver meaningful ROI for our customers, helping them increase revenue, reduce costs or mitigate risks.

With that, let me turn the call over to Chris Lynch to review the financials. Chris?

Thanks, Vivek. Today, I'm going to provide a brief overview of our third quarter financial results and provide guidance for the fourth quarter, and also for our full fiscal year, both of which end on January 31, 2022, and then we'll open it up for questions.

I should point out that in addition to our GAAP financial results, I'll also be discussing certain non-GAAP numbers today. Our GAAP results, along with the reconciliation between GAAP and non-GAAP results, can be found in today's earnings release and on our Investor Relations website.

As you've heard from both Ragy and Vivek already, we delivered another really strong quarter across the board, accelerating the pace of our top line growth yet again. Last quarter, we reported revenue growth of 27%. And this quarter, we're reporting another significant acceleration with total revenue up 32% year-over-year to $127.1 million. That's driven largely by subscription revenues of $109.9 million, which grew 29% versus Q3 of last year.

Our non-GAAP subscription gross margin improved to 80% in Q3, which helped us deliver a non-GAAP total gross margin of 71%. And on the bottom line, we generated a non-GAAP operating loss of $13.5 million for the quarter, while using just $1.1 million in operating cash flow and only $4.1 million in free cash flow. That impressive cash flow result helped us end the quarter with well over $0.5 billion of cash and short-term investments on the balance sheet, so we have plenty of capital to continue growing the business.

I'm also happy to report a notable 300 basis point increase in our net dollar expansion rate this quarter to 117%. That calculation, you'll remember, is using trailing 12-month subscription revenues. And this dramatic increase over the last 90 days is further evidence that the go-to-market investments we started making in the back half of last year are continuing to pay off. That's true of our billings as well, which were up year-over-year by 31%, and that's the third consecutive quarter that our billings growth has been up by at least 30% versus the prior year.

Current remaining performance obligations, or CRPO, which represents contracted revenues that will be recognized over the next 12 months, that was $329.6 million at the end of Q3, and that's up 29% versus Q3 of last year.

And then finally, as you heard from Ragy earlier, we now have over 80 customers contributing $1 million or more in subscription revenue over the last year, that's also a 29% increase year-over-year. And that momentum, it just speaks to the strategic value that our Unified-CXM platform is creating for the world's largest and most valuable brands.

So that brings me to guidance for the fourth quarter of fiscal '22 ending on January 31. We expect subscription revenue to be within the range of $113 million to $115 million, that represents 27% growth year-over-year at the midpoint. And we expect total revenue for the quarter to be in the range of $129 million and $131 million, representing 25% growth year-over-year at the midpoint.

It's only a small piece of our total revenue, but it's probably worth calling out that service revenue grew 52% last quarter due to some really strong execution from our team. And while the service business remains strong into Q4, particularly our recurring services, we're expecting the growth rate in services to normalize in Q4, which is why subscription revenue guidance is at 27%, while total revenue guidance is at 25%.

Consistent with the operating plan we set out at the start of the year, we expect a non-GAAP operating loss in Q4 in the range of $21 million to $23 million and a non-GAAP net loss per share of $0.08 to $0.09, assuming 260 million weighted average shares outstanding.

For our full fiscal year, which also ends on January 31, we're providing the following guidance. We expect subscription revenue to be in the range of $423 million to $425 million, representing 25% growth year-over-year at the midpoint. And we expect total revenue to be within the range of $486 million to $488 million, that represents 26% growth year-over-year at the midpoint.

For the full year, we expect a non-GAAP operating loss in the range of $48 million to $50 million, and we expect a non-GAAP net loss per share between $0.30 and $0.31, assuming 195 million weighted average shares outstanding.

Results like these aren't created overnight, so I want to echo what both Ragy and Vivek said and thank everyone at the company for delivering such a strong result this quarter and for helping us to start capitalizing on our huge market opportunity, on our technology leadership and for helping to create a durable multiyear growth opportunity here at Sprinklr.

Let me leave you with a summary of these results as I see them. Last year, we laid out a plan to dramatically accelerate the revenue growth of this business. And with 4 quarters of accelerating growth rates, we've delivered on and actually exceeded that plan. We said we have the right product in the right market at the right time and that we needed to invest in our go-to-market machine and to build out distribution.

That's exactly what we've been doing. And today, we've got more sales capacity than we've ever had. We have a bigger global footprint than we've ever had, and there's more awareness than ever before of the value we are creating for our clients.

And this incredible momentum in our business can be seen in every one of the metrics I just talked about, whether it be net dollar expansion, subscription revenue growth, CRPO, billings or the number of customers paying us more than $1 million each year. That's why, as we round the corner towards our next fiscal year, the team here at Sprinklr are so excited about the opportunity ahead. With that, we're happy to take your questions.

(Operator Instructions) Our first question is from Raimo Lenschow of Barclays.

This is Frank on for Raimo. Congrats on your results today. So a large customer adds accelerated again this quarter. Could you provide some more color behind that? Was this growing customers across that threshold? Or were you more landing above the $1 million mark there?

This was growing customers across the board. And consistent with the previous quarters, we had a similar mix in terms of upsells and new logos. What's been really exciting though is when you think about the 80 $1 million-plus customers, and that's up 29% year-over-year, we expanded at customers like Pepsi, Keystone, Samsung, Nestle and the new logos and customers like Hugo Boss and Land O'Lakes.

But also when we talk about vector 2, we continued to add new logos, Ledger, CrossCountry Mortgage, and Everlane and saw partners step in and add even more value this particular quarter.

That's great to hear. And I was wondering if you could give an update as well on the sales hiring and ramping. Is there any impact that we should consider also from the tighter labor market?

So I think, look, from a sales capacity perspective, we've inflected up and you're seeing the result of that inflection in terms of going from 19% to 27% to 32%. And we've got the highest sales capacity we've ever had. And as we look ahead in terms of Q4, we're seeing good kind of pipeline and demand environment.

And as far as the labor market is concerned, I think, look, every company around the world is contending with the great resignation. But as we came out of COVID, one of the things that we did do is made sure that we're inflecting up, and we believe we're in a good position with the capacity that we have.

One of the things we've been doing is streamlining sort of the internal career progression within our go-to-market organization, where somebody can start right out of the university into an XDR program and then SDR program then into account executives. So we think we have a good short-, medium-term strategy to address and get ahead of the labor shortage.

And I would also -- back to your question, Raimo (sic -- Frank). I think what you're seeing is a market recognition of what we've been saying for a long time, and it's the point solution isn't sustainable for all these modern channels, right? And their modern channels -- and more customers are jumping on to channels like TikTok and the newer ones, and they can't go to more point solutions.

And what we're seeing, I would say, having done so many customer meetings in the last 3 months, what we're seeing is sort of a recognition that Sprinklr is probably the only viable third or fourth platform in the enterprise. So we're not talking SMB, we're talking about large global companies that take 3, 6, 9 months to execute a procurement contract.

And in that segment, there's a recognition that, yes, we have picked Microsoft salesforce. Yes, we've picked Adobe. Now who is the third? Who's the fourth platform? How do we get to 80% of the functionality and 90%? And with 31 products, we are the shortest path to that consolidation, which I think IT teams would agree that they need because the point solution chaos is just unsustainable.

Our next question is from Mark Murphy of JPMorgan.

Congrats on the very nice acceleration that you're seeing in the business. So Ragy, I wanted to ask you what do you think is underpinning the success that you've been having recently in some of these very large cloud-based contact centers or CCaaS, where I think you've had some of those wins that have been thousands of agent seats. And I'm wondering if the addition of some of the voice offerings -- or excuse me, the voice APIs from Amazon and Twilio might be creating a tailwind.

And then if I could sneak in a follow-up for Chris. I was wondering maybe -- I heard all your comments on sales capacity. Where are we in the cycle of kind of ramping up the quota-carrying sales rep headcount? I'm just wondering, does it continue to rise pretty rapidly in the second half and beyond? Or -- is kind of the -- is the sales and marketing spend as a percentage of revenue kind of maybe peaking out somewhere around now?

Mark, thank you very much. Great questions. Let me kind of just double-click on what we're seeing in customer care. As we outlined in previous quarters and at our IPO, care is something that we're putting a lot of focus on as a company.

As you know, we got started with customer care in Modern Channel. So someone's tweeting it to you or sending you a WhatsApp message or Google messaging you or Apple messaging you, that digital interaction shows up with a lot of context as a text message.

And if you have deep AI like we do, we're able to understand what product, what problem and the agent who is best qualified to resolve it and then suggesting using AI, the Smart Response, which makes an average agent as smart as the best agent they got in that specific product. And we've been -- product issue, and we've been innovating with concepts like guided path and allowing agents to just really dumb down the resolution. And while integrating to all other systems like the traditional care solutions do.

And so what we're seeing is our first generation of customer care clients are actually seeing victory on both sides. They're seeing dissatisfaction go down because we can intervene using AI in real time with sentiment and either route to a different agent will come up with a better, faster solution -- they've seen dissatisfaction go down and CSAT go up. And they're also seeing costs go down because of the integrated nature of chatbots and AI that goes into the platform and the guided path and the Smart Responses.

So this double victory, as I think of it, it's kind of -- is a big thing for them. And we are benefiting from more cases moving to modern channels, from voice and e-mail, number one. Number two, we're also benefiting from customers going, "Hey, if I'm spending 30% less on these channels because we are doing such a good job of AI-based optimization, how do I move my live chat over? How do I move my voice over?" And I mentioned already that our first set of clients are going live on voice and Honda just did.

And Live Chat, by the way, has quickly become -- it's our #2 care channel today, and it's just eclipsed all our other social messaging channels. And that's one of our newer innovations. That's where we go up against traditional like chat-only competitors, some of which are public companies.

So we're benefiting from more volume shifting to modern channels, and we are benefiting from customers wanting to take what -- the work they're doing on modern digital channel care solution using Sprinklr and trying to move more channels to this. Does it make sense?

Yes, it does. I did not realize that Live Chat had become your number 2 channel today. So yes, that's pretty fascinating.

Mark, it's Chris. Let me pick up on the second element of your question. And last year, you remember, we generated positive income on a non-GAAP basis. And we were free cash flow positive in both of the last 2 fiscal years. So we know how to run an efficient business and make money.

But we raised capital, not to put it in the bank and get 20 bps of interest, but to deploy some of it and accelerate that top line growth. And towards the end of last year, we laid out a plan to do that and with 4 quarters of accelerating growth rates, we're absolutely delivering on that plan.

That plan required us to invest in our go-to-market machine and build out that distribution channel. And that's exactly what we've been doing over the last 12 months. And as Vivek said, we've got more sales reps than ever before and more sales capacity than we've ever had before. And that's the reason you're seeing that sustained acceleration on the top line.

And at this scale, we can start driving meaningful leverage into the model when we're ready. But we think the approach we're taking right now is going to generate much more value for our shareholders in the long run. And if you have a conservatively run business, and we're very conscious of the need to balance that level of investment with the level of growth, but we think we've got the right balance in the moment.

If you think about it, we just grew our top line by 32%. We delivered $127 million in revenue, which any way you slice it, that makes us a $0.5 billion revenue run rate business. And we did that spending just $1.1 million in operating cash flow. And we think that's pretty darn efficient. So right now, we're continuing to add sales capacity pretty aggressively.

Our next question is from Michael Turrin of Wells Fargo.

I guess, first, I mean, Sprinklr has historically operated as [op] market focused. You've seen average ASPs in the hundreds of thousands. Can you talk more around the lighter touch self-service products and how those fit or complement that vision? Are those customers you aren't currently addressing? Are those ways to get more enterprise customers trialing pieces of the platform and converting over to the broader platform? Or maybe you can just expand on the vision there.

Thank you, Michael. So I can confirm that the current strategy is to use these self-service in our trial easy-to-use products as on-ramps to experiencing our brand and our enterprise suite. So we've talked consistently about 2 vectors of growth. Vector 1 is the biggest 10,000 companies in the world, of which we already have over 1,000 brands as customers.

What we want to do as we look at the next 5, 10, 15, 20 years, what we wanted to do, starting a couple of quarters ago, was how do we go from looking at those 10,000 companies where we can have reps call one-on-one to the next 90,000 because we think we are a great fit for companies with, let's say, $100 million or more in revenue in most sectors around the world, and 90,000 companies cannot be called on and demo done on a one-to-one basis.

So our self-service products are a way for us to introduce our products and capabilities to that vector 2 or the next 90,000, where they can move down that funnel and ramp on so that it's easier for them -- for us when they contact sales or when we contact them for us to get them closer to signing a contract.

So today, it's not a move to go beyond our 100,000 target customers. But we've seen this movie so many times. Whatever works for the next 90,000 is, at some point, easily extensible to long past that. But we think there's a big company to be built just in vector 2 and as we expand to vector 1 and as we expand to vector 2, we think that we're really seeding the opportunity in a really large marketplace.

And just to add to what Ragy said, these are still companies that are very large, with complex business needs and point solution chaos, and they have revenue between $100 million to $1 billion. And the goal of these lite products is to actually accelerate and drive greater efficiency, as Ragy said, and in terms of making sure our inbound engine continues to become more and more efficient.

That's helpful. All very sensible. I guess just one, if I may, on the financials. And Chris, the billings, you mentioned third straight quarter of 30%-plus billings growth. It did tick down modestly sequentially here in Q3. It's consistent with what we've seen from the model. So is there any characterization you could just provide on the seasonal profile? Is this more Q2, Q4 heavy? Or anything else we should just take into context there is helpful?

Yes. Thanks for the question. So I think as you probably observed, the interesting thing this quarter is that all of the metrics that we look at as potential leading indicators to revenue growth are aligning. You've got subscription revenue growing at 29%. You've got CRPO growing at 29% and you've got billing growing at 31%. That sequence actually, subscription revenue, CRPO and billing is actually how we internally prioritize the order of those metrics in the context of which are better leading indicators to revenue growth.

Specific to the billing question. I've mentioned before, billing can be a little lumpy for us, in part because I've got more than $0.5 billion in the bank, and I tend to be more flexible on billing when I need to be. So when you look at billing over an extended period of time, you could look through some of that quarterly lumpiness, and all 3 quarters so far this year, as I mentioned, of billing has grown by more than 30%. And I think full year billing growth of 30% is how you should think about your modeling for Q4.

Hopefully, too, now that you've got CRPO as a year-over-year metric, which we didn't have last quarter, you can lean on that a little bit more, which is a bit more of a robust metric as a leading indicator. But I think just the fact that all metrics are landing in and around the 30% growth mark kind of helps triangulate things as well.

Our next question is from Stan Zlotsky of Morgan Stanley.

Congratulations on a strong quarter. I wanted to actually follow up on a prior question on Sprinklr Lite. Could you maybe just refresh us on what are the differences between the core Sprinklr product and the Sprinklr Lite product? Which are the components that truly make it lite? And what has some of the initial feedback been from customers and participating in beta? And when could we see the beta transition over to the product being generally available? And then I have a quick follow-up.

Sure. Thank you, Stan. Our approach with the lite products is to do 2 things. A, all the core capabilities are there, and we've stripped down the things that like really advance large enterprise deployments need.

The second thing that is different about the lite product versus the enterprise product is the fact that in the lite product, most of Sprinklr's powerful capabilities are preconfigured, either by the industry or by like a solution set. Like, for example, in research, the products, the locations, all those things by industry, we've preconfigured, making it super easy for someone to get started.

But as you know, large companies want to just like really get their hands into tweaking and tuning it, right? Customize their AI models, train them, all of that. So it really gives you the entry point and then once you experience it, you go, "Well, I know this is working for me. And if I'm able to customize this with that or add more workspaces then that's what really we can use as a large company." So that's really the 2 distinctions I'd make.

We started with the research product. As I announced today, we are launching our care product in beta, which we're super excited about. And the research and care are designed to work together, right? Think about that 1 star review. That's actually a 1-800 customer call when you have research and listening connected to care. And then we'll go on to launch engagement, and then we'll follow it up with marketing. And by, say, end of next year, we're going to have this unified front office available in a self-service mode.

Now that's a good time for us to make a decision on, "Hey, are we going to use this as a revenue generator? Or are we going to just use this as a pipeline demand generator?" And today, it's a pipeline demand generator. So we're really not investing into customers staying on there forever, but more as, hey, you've experienced the product, you've experienced the capabilities, the power and you've experienced our brand and can we talk into that what you really need and you becoming enterprise client.

Perfect. That's very helpful. Quick housekeeping -- 2 housekeeping points for Chris. If we look at billings and essentially, if we do total billings for the year around 30%, that implies roughly 20% year-on-year growth in Q4 for billings. Can you just give us kind of a little bit of background?

Last year in Q4, total billings essentially were 0% growth, current billings were 2%. What are the dynamics that we need to keep in mind from Q4 a year ago that inform the -- kind of the 20%-ish implied billings growth for Q4 of this year?

Yes, there's a little bit of seasonality in our billing. And it kind of -- it follows a pattern where our renewals happen, but the year-over-year comparison is against the COVID year. We did -- I think I mentioned before, we did some pretty unnatural things to really support our customers, many of whom were challenged when their businesses got shut down.

And so we pushed a whole bunch of the billing that we ordinarily would have pushed into the earlier part of the year into the back half. And that's why you're seeing the -- sort of the year-over-year growth around the 20%-something mark this year.

You see, earlier this year, Q1 for us was 45%, if I recall, year-over-year growth. And so it's a bit of an unnatural pattern this year just because of a strange billing pattern in the COVID year.

Got it. And Chris, did you give out a customer count number? I don't know if I -- total customer count. I don't know if I missed it.

Yes, it's 1,100. I think Vivek mentioned it in his prepared remarks.

Our next question is from Tom Roderick of Stifel.

Let me start this first one -- it's a bit of a high-level question, but Ragy, you and Vivek both sort of referenced this $500 million run rate you're running through right now. Some businesses kind of hit a little bit of a wall when they get to that $0.5 billion mark and some start to accelerate.

And I guess what it seems like we're seeing, with your business is the latter. Your business is accelerating. It seems like perhaps some of these bigger deals are coming easier. And I do not suggest the world is getting easier for you, but I'd love to hear just a little perspective on maybe the critical mass of what you're accumulating as you go through $0.5 billion?

And I guess, the question behind that would be are larger customers leaning in and buying more at a faster pace? And do you feel like the cadence of business is perhaps coming a little faster and easier to you now that you've got the brand reputation, the public backing behind you, just give us some sense of what that means as a public company? And the momentum that you're seeing and the sales cadence?

Well, I can confirm that it is actually feeling and we're sensing that larger companies and their need to consolidate is much more pronounced today. So I think there are 3 things at play here from what we can see. The first one is I think this point solution saturation has hit its peak. And you can see, if you look around at all the point solution competitors that we used to have, you can see the winners and the others separate themselves in -- both in the SMB space and on the enterprise space, right?

So you're seeing a lot of companies that are struggling, and that's a recognition by larger companies that, look, I can't afford to have another customer ID and another integration and another RFP and another content ID and something that doesn't fit into my workflow, I'm not going to integrate another point solution to Salesforce, Adobe. So that's the first point that I'd make.

The second point is look, we are chasing a very ambitious vision. We know that. It's -- we're almost building a digital customer operating system for, let's say, 36 channels and across different functions where we are rebuilding the Care stack for today, right, looking future backwards. It took us many, many, many years of constantly being under construction and scaffolding all over the place and customers were sensing that.

Now what you're seeing is a lot of that platform building is done and customers are seeing us add features and making it easier for them to use. And I'll give you an example. Where -- I was talking to the head of business commercial sales at a large automotive company. And they are in the process of rolling Sprinklr out and their team basically said that they have never seen consensus across all their markets in wanting 1 solution, and it's the first time.

And as they were running their RFPs, they got called from several marketing, please pick Sprinklr. So what you're seeing is the practitioners are seeing that the platform is stable, it's easier to use. And that noise is going away and the executives are beginning to see the need to consolidate and get closer to customers.

And so it's the market maturity, number one; the platform maturity, number two; and the third thing is, look, I think we were hoping and it's very early still, market doesn't know our story, but it's beginning to. And I -- when I just look at the meetings that we have now, I told you, we were just counting the other day, 45 meetings in the last few months. And suddenly, most of it is with the C-suite.

And whether it's the [CEO] of a large pharma company or the CMO of a global CPG company, we're getting the attention that we're a strategic partner. And I'm like hearing this concept of, "Okay, we need a third platform" or "we need a fourth platform". Sometimes it 3, sometimes it's 4. Very often, it's 3. And it's a Microsoft, Salesforce, Adobe and they're feeling out all the overlap. And then we emerge as the consolidator of the other noise for modern channels.

And that's a theme that's helping us and hopefully, with every one of these calls that we do and every report that you write, just getting our story out is all we need because we've got happy customers saying great things about how we're a strategic partner for them.

Yes. That's really helpful, Ragy. I appreciate the thought of the ambitious vision because that certainly seems like that's where you're headed. I want to just talk really quickly or ask really quickly about self-serve here, particularly down the [carriers now with self-service] as well. Might be a good question for Chris just relative to the costs associated with supporting that.

Obviously, that could be a really efficient sales channel once it's up and running. Can you just talk about some of the infrastructure needs you might have from a billing and go-to-market perspective as well as any other things that we ought to be thinking about from an investment perspective to support the buildup of that self-serve business model?

Yes. Tom, let me just kick it off and Chris will add to it. I want to say that the self-service product for us is a user interface. It's a skin on the same underlying infrastructure that we built for 12 years. So it's not like we have taken a large chunk of our engineering team to enable the product because this unified platform architecture that we think we've done a really good job for 12 years and all the expenses are there.

So for us to put another UI skin, simplifying all the configurations we've been doing anyway to simplify our enterprise implementation. So broader company engineering and go to market, it's just not a big lift for us. Chris?

Yes. Ragy is on the key point there. This isn't a big lift for us. It's really a subset of what we've always been doing and have been doing for the last 10-plus years. So yes, there's a little bit of tweaking around the edge this time, but this isn't a significant investment like you would think if we were going into a completely different area of the business.

We have reached the end of the question-and-answer session. I will now turn the call back over to management for closing remarks.

I'll close with saying what I always say. We're here to do 3 things. We think there's a category coming and it's whatever we end up calling it, we call it unified customer experience management. And it sits -- connects to the CRM the transactional data and consolidates a lot of the operating heavy lifting that happens around it. This platform would make a salesperson sell better, a care person take care of customers better, a consumer insight person get better insights faster, and I think will end up being very strategic.

The second is we're trying to do something different culturally in our enterprise software space, we want to build the world's most loved enterprise software company. What that means is we have to approach our customers sales market, deliver very differently. And I am very encouraged by the progress we are making on that front.

And lastly, we want to set the benchmark for employee culture, where we treat one another like family and take care of each other while we obsess about customers. So I want to thank you all for your interest. And as we always say, this is a 5-, 10-, 15-, 20-, 30-year run, and we want to build a durable company. And every other short-term priority would be subservient to this long-term vision for us. Thank you again, and please have a great evening.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great evening.